Transwestern Pipeline has offered a proposed settlement that seeks to resolve FERC’s concerns over the high transportation rates the pipeline charged customers during the California energy crisis under index-based negotiated rate agreements (see Daily GPI, July 18). It has asked the Commission to schedule settlement talks within 30 days to discuss the issue of refunds.

In July, the Federal Energy Regulatory Commission suspended for one year Transwestern Pipeline Co.’s authority to negotiate rates based on basis differentials and ordered refunds for excess charges, which at times reached 100 times the maximum regulated rate during the California energy crisis in 2000-2001.

Transwestern has proposed that the settlement render FERC’s July 17 order “moot” and therefore vacated. Customers involved in the refund settlement negotiations will include Sempra Energy, Richardson Products, BP Energy, Reliant, Astra, USGT and Dynegy, it said. The Enron pipeline noted it already has had “preliminary discussions” about the proposed settlement with “all parties” to the proceedings. Each of the companies had index-based contract arrangements with Transwestern during the critical 2000-2001 period.

Within 15 days after the end of the term of each contract listed, Transwestern said it will calculate the total amount collected from each party under index-based rates, and compare it to the total amount that would have been collected under maximum recourse rates. If the index-based rate amount exceeds the maximum recourse amount, then it noted it will pay refunds.

The refunds will be paid to eligible customers within 30 days of the later of: 1) the Commission approval of the settlement; or 2) the end of the term of each contract in question, Transwestern said.

The settlement stipulates that Transwestern will not enter into index-based rates for a full year “under which the index-based rate formula will result in rates that exceed the maximum recourse rates.”

The settlement also calls for FERC to defer action on requests for rehearing of the July 17 order, on Transwestern’s Aug. 1 request for clarification of the refund methodology and on its Aug. 6 proposal for tariff revisions, pending the outcome of the settlement talks.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.